Joint borrower sole proprietor mortgages.

A joint borrower sole proprietor mortgage is one where not all the borrowers are/will be legal owners of the property.

Sometimes borrowers, particularly first time buyers, cannot pass affordability checks on their own. If their salary doesn’t meet the amount they need to buy a home they could ask family members to be on the mortgage.

It’s not just first time buyers who can benefit. Older family members who are retiring, and experiencing a drop in income, might want to add relatives onto their mortgage to enable them to buy a home, or stay in their current home.

Divorce often calls for family support. Adding family members onto a mortgage might allow someone to buy out their spouse and stay in their home, or enable them to move to a new home.

One reason a borrower might want a family assisted mortgage is to help with affordability. Maybe their salary doesn’t cover the mortgage amount they need to buy a home.

Or perhaps an older family member is heading into retirement and wants their children on the mortgage to enable them to buy a home, or stay in their current home. Divorce may require family support. For example, adding family to a mortgage can help buy out a spouse or secure a new home.

Pros – stamp duty

If the family member(s) who are assisting own their own property (or intend to do so in the future) then there is a benefit when using joint borrower sole proprietor. This is because when you own more than one property you can be liable to pay stamp duty at a higher rate. Because the assisting family member/s would not be a legal owner there wouldn’t be this additional stamp duty cost.

Pros – Tax

Take a married couple, where one partner is an additional or higher rate taxpayer, while the other pays the basic rate of Income Tax, or is a no-tax payer. Through a joint borrower sole proprietor mortgage, the couple may be able to purchase a buy-to-let property in the name of the lower earner, meaning a more tax efficient return on their investment.

Cons – legal ownership

With joint borrower sole proprietor, the assisting family member/s will not be legal owners. However, they will be ‘jointly and severally liable’ for the mortgage payments (this means that all borrowers are equally responsible for the mortgage payments). Non-owning borrowers do not have any rights over the property and will not gain from any increase in property value.

The assisting family member(s) will not have control over the property in terms of upkeep and maintenance.

Joint borrower sole proprietor can’t be used with other government first time buyer schemes.

Cons – thinking ahead

It’s important to think ahead. For example, what would happen if someone decides in the future they no longer wish to be named on the mortgage. This may be because they want to purchase another property, and the original mortgage is affecting the amount they can borrow.

To enable someone to be removed from the mortgage, the proprietor and any other borrowers would need to be able to pass affordability on their own.

The non-proprietor will be required to obtain independent legal advice to ensure they fully understand the implications of being named on the mortgage but not owning the property the loan is secured on.

Joint borrowers must be close family members. This means parents, grandparents, son, daughter, brother or sister, stepfamily, and adoptive family.

We will accept up to four applicants and up to all four incomes from a maximum of two households. For expat applications we can accept two borrowers in total.

There are a few banks and building societies who offer joint borrower sole proprietor, and each has different criteria such as numbers of applicants and lending limits.

Applicants need to be at least 18 for a UK mortgage and at least 21 for an expat mortgage.

We will accept up to four applicants and up to all four incomes from a maximum of two households.

Yes they can, however they wouldn’t be able to also gift the deposit.